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Colorado health rate spike will hit business, employees again

Colorado employers are seeing their health insurance bills spike nearly 11 percent for next year, ending two years of relatively low health inflation and sending businesses scrambling to push more costs onto employees.

A comprehensive annual survey of 364 employers by the Lockton Denver Benefit Group showed bills for 2014 jumping 10.9 percent, up from 7.4 percent in 2013 and 9.4 percent in 2012.

Survey author Bill Lindsay of the Lockton consulting group said employers are attributing much of the jump to minimum benefits required under the Affordable Care Act and to new taxes to pay for the act now being passed on to policyholders.

"There's a cost to it, and it's got to be paid for, and that's what we're seeing now with the rates," Lindsay said.

Consumer and advocacy groups downplayed the role of Obamacare reforms in the price jump for employers.

"The answer is incredibly complex. We have and continue to see a slowing in the rate of increases," said Dede de Percin of the Colorado Consumer Health Initiative. "Rates have gone up every year."

Recent increases are lower than hikes approaching 20 percent in the early 2000s, she noted.

The price increases hit amid problems with the rollout of Obamacare and a loud debate over the reforms, meant to extend care to more people and stop abuses in insurance coverage and charges. The act opened access to the uninsured and revamped some private insurance practices, but critics and even many supporters say it did not alter the relentless course of cost inflation in health care.

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A more useful number in the Lockton report, said University of Colorado Denver associate professor Adam Atherly, is that employers negotiated their 10.9 percent average increase down to 6.4 percent. They did so by cutting benefits, shifting costs to employees or changing carriers.

The 6.4 percent jump is in line with other states and with other years, said Atherly, an expert in health policy and analysis at the Colorado School of Public Health. Last year, the increase was 5.3 percent in Colorado.

Those costs are pushed onto employees, Atherly and others noted, dampening worker perceptions even as the economy improves.

"The health-care system is eating up all the productivity gains in society," Atherly said. In addition to higher deductibles, many employers are moving to much more limited networks of doctors, hospitals and pharmaceuticals.

Health reforms included new protections for employees with company insurance, such as no denials for pre-existing health conditions and an end to annual or lifetime payout caps for major illnesses, noted Ryan Sarni , a labor and employment attorney with the Mountain States Employers Council.

Those benefits go to small numbers of people, while the larger group notices higher premiums and higher deductibles or penalties for the unfit that employers use to lower their insurance bill.

Three-quarters of health-care costs are from hospital and doctor bills, Atherly said. Colorado and federal Medicare officials are experimenting with some cost controls, such as bundled payments that allow providers to keep a profit if they reduce overall spending.

So far, health inflation has overwhelmed those experiments.

A bright spot for employees that is directly attributable to the Affordable Care Act, de Percin said, is that if insurers raise rates too high, they must refund money to policyholders. The act only allows them to keep a set percentage of premiums as profit. Insurers have returned millions of dollars to customers in refunds when claims were not as high as predictions.